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Student Loans and Student Debt

December 7, 2012

Student loans and student debt can be daunting topics, especially when you read headline stories about college graduates who have six-figure debt and no job. Being informed will help you and your student ask the right questions and make smart, long-term financial decisions when it comes to student loans and student debt. Today’s post provides three resources to help you consider the options and make wise decisions.

#1 Student Debt: Myths and Facts
The Council of Independent Colleges, a national organization representing small and mid-sized, independent, liberal arts colleges and universities in the U.S., released a study last month entitled "Student Debt: Myths and Facts." The findings provide an interesting balance to some of the media articles that have been published recently about the critical issue of student indebtedness.

#2 Top 5 Things to Know Before You Accept a Loan
The Wall Street Journal also provides a helpful blog post regarding the top 5 things a student should understand before taking out a loan. Here's the condensed version:

Research what is available- scholarships, grants, loans, etc.

Know the terms of the loan.

Recognize that loans will not go away until they are paid.

Look up information on your institution.

Look up the earnings potential of your major.

#3 How Much Debt do Most College Graduates Really Have?
One last helpful article, a blog post from financial aid consultants, Scannell & Kurz, summarizes new statistics on student debt. For example, 1 in 3 students graduated with no student loan debt, while the average debt of the remaining two-thirds increased from $25,250 to $26,600 last year.

As you visit colleges this fall, ask about student indebtedness and loan default rates:

What percent of your students graduate with debt?

What is their average indebtedness?

What is your graduates' loan default rate?

Last year the two-thirds of Cedarville graduates who had loans borrowed an average of $20,789 through the Federal Stafford Loan program. This equates to a $260 monthly repayment, a manageable level for working adults.

This conservative approach to debt is affirmed by Cedarville graduates' remarkably low loan default rate of just 0.8%. The national average default rate for private colleges is 5.2% while the overall national loan default rate is 9.1% These results affirm both the quality of a Cedarville degree and the availability of career opportunities for our graduates.